Archive for category Daily Service
NYT article by Tara Siegel Bernard
Christine Salerno is like many other single working mothers with small children, but her days are often packed with even more emotional highs and lows: Her 4-year-old daughter, Lily, with soft brown eyes and a wide smile, was found to have Rett syndrome, a rare neurological disorder, last year.
Lily’s case is relatively mild, but she still has limited use of her hands, has difficulty swallowing and can verbalize few words.
Ms. Salerno has spent many late nights researching the types of services and therapies that will help Lily now, but she also needs to think hard about her care decades into the future. “She has 10 therapists and 15 doctors, and I manage all of this,” said Ms. Salerno, 41, of Brooklyn. “This is a lifetime thing. They have reversed Rett syndrome in lab mice. I can be as hopeful as I want, but I still have to prepare.”
Planning for family members with special needs can be overwhelming, particularly when so many decisions may have lifelong consequences. Beyond figuring out the intricacies of government programs, parents fret over guardianships, how governmental services may erode and what legal documents they need.
Ms. Salerno, a single mother, knows she needs to plan carefully for Lily’s financial needs. Credit Emily Andrews for The New York Times
And soon there will be a new savings account to consider, known as a 529A or ABLE account, which will permit people with disabilities to keep more money in their own names without losing means-tested benefits.
Here are tips for families beginning to plan for individuals with special needs:
Saving for retirement takes on new meaning when you also need to budget for an extra person. You may need to take precautions that money set aside for your child won’t be consumed by long-term care expenses for you or a spouse, for instance. “I call it ‘retiring for three,’ ” said Mary Anne Ehlert, a financial planner in Lincolnshire, Ill., who had a sister with cerebral palsy. “One child is going to need some support throughout the parents’ retirement, so the parents’ retirement funds need to accommodate that.”
Though it varies by state, one important benefit is likely to be Medicaid. Although it is often regarded as a program solely for the poor, Ms. Ehlert says it serves as a “golden ticket” because in addition to covering health care for people over 18 with disabilities, it also provides entry to other programs and services that help with, for example, learning tasks for a new job or life skills. It may also help pay for group residences, she added.
Many families supplement what Medicaid provides by putting money into a special needs trust; those funds can then be used to help pay for the individual’s expenses without jeopardizing government benefits.
The ABLE or 529A account, a tax-advantaged savings vehicle, is expected to become available in the year ahead, and will allow people to save more. Typically, any more than $2,000 in cash savings or other assets will disqualify people with disabilities from public benefits like Medicaid and Supplemental Security Income, also called S.S.I., which provides a monthly check for disabled people with low incomes.
Modeled after 529 education savings accounts, 529As are expected to be easier and far less costly to set up than special needs trusts.
But because 529A accounts have several limitations, they are not likely to replace the need for trust accounts for many families, though they may serve as a nice supplement. Although anyone can contribute to the 529A, including the person with disabilities, total contributions are capped at $14,000 a year.
Contributions are not tax-deductible, but the money grows tax-free, as long as withdrawals are used for disability-related expenses, like education, assistive technology and personal support services, health and wellness, among other things. But “it can’t be used for Disney World, it can’t be used for the movie theater,” said Brian Rubin, a lawyer on special needs in Buffalo Grove, Ill.
The 529A accounts are likely to be most attractive for disabled people who work and want to save more than $2,000, or for families who need a place to deposit gifts or inheritances from family members. Once the account balance exceeds $100,000, however, the individual’s S.S.I. benefits will be cut off (Medicaid isn’t affected). Spending ABLE account money on housing may reduce S.S.I. payments, too.
There’s another drawback: After the individual dies, any money left in the account may be claimed by the state’s Medicaid program for expenses incurred after the account was opened.
The accounts will be administered by the states, most of which are either working on or have passed laws to create the accounts, according to Sara Weir, president of the National Down Syndrome Society.
There are a few types of special-needs trusts, but “third party” trusts are frequently used by families who want to supplement what the disabled person receives through government-run programs. The trusts can sit empty for years, families can add money over time, or they can fund them with life insurance and estate proceeds. And they are quite flexible: The money can be spent on just about anything, as long as it’s for the beneficiary, and any remaining money can be left to family.
But creating them can cost roughly $2,000 to $5,000, according to Richard A. Courtney, president of the Special Needs Alliance. And hiring professional trustees to manage the trust — instead of relying on family members — can also be costly. States have their own fee schedules, but a professional trustee to handle investing, distributions and other administration can cost at least 1 percent of the amount managed, lawyers said.
Lily with her mother, Christine Salerno, during a therapy session with Katherine Dimitropoulou, an assistant professor of occupational therapy at Columbia University. Credit Jake Naughton for The New York Times
Pooled trusts — where assets are professionally managed alongside other peoples’ funds in the pool — are an option for families with less money or little family to help oversee the process, lawyers said. Though the rules vary, any remaining funds after the beneficiary dies may be paid back to the state or organization running the trust.
Many families use life insurance to “fill” the supplemental trusts. Term insurance is generally the cheapest option, but because it covers only a set period of time, Ms. Ehlert believes that most people will eventually need some sort of permanent policy. A “survivorship universal life” policy that pays $1 million after the second spouse dies may cost roughly $289 monthly for 20 years for someone who is 30 years old, but $658 if you buy it at age 50.
“People have to look at the needs and circumstances first, and the product second,” said John W. Nadworny, a financial planner in Winchester, Mass., whose practice focuses on special needs.
Families probably agonize most about whom to appoint as a guardian to look after their child, as well who will serve as a trustee to oversee any trust accounts. Several lawyers who focus on special needs suggested splitting roles to build in a system of checks and balances: Have a guardian who will advocate for the individual, and a separate trustee to handle the money.
Though hiring professional trustees can be expensive, appointing family members to oversee the money comes with its own risks and challenges, which many do not anticipate. “It’s not a question of affection and loyalty, it’s a matter of whether they have the capacity, the aptitude and the time,” said Tara A. Pleat, a lawyer on special needs in Clifton Park, N.Y. “Most people accept the appointment without realizing how much work needs to be done.”
Relying on professionals who have only dabbled in this area is risky; you don’t want to jeopardize losing access to government programs because of a poorly drafted will or trust. Many families may find the most comfort working with professionals who have been though the process with their own family, and many of them have. The Special Needs Alliance and the Academy of Special Needs Planners have directories of lawyers and others who can help.
And if you work with a financial planner, find one that does not have anything to sell but time and expertise. Otherwise, you may end up buying too much insurance or other products you do not really need.
Dee and John Reeves, both 71, of Antioch, Ill., thought they had a solid plan in place for their 43-year-old son, Sean, who has Down syndrome. But decades later, they realized they had to make several changes. They worked with Protected Tomorrows, an advocacy service that Ms. Ehlert created, which grew out of her financial planning practice. Besides helping with money matters, Protected Tomorrows can assist with public benefits and other life planning programs, like the two-week sleepaway camp it found for Sean.
“Even after I am gone, I have to make sure that he is safe,” Ms. Reeves said. “You can’t come back and fix it for them.”
Posted by: Steven Maimes, The Trust Advisor
Apple Inc Chief Executive Tim Cook is joining the roster of the very rich who are giving away their wealth.
Fortune magazine cited the head of the world’s largest technology corporation as saying he planned to donate his estimated $785 million fortune to charity – after paying for his 10-year-old nephew’s college education.
“You want to be the pebble in the pond that creates the ripples for change,” Cook told the magazine.
Fortune estimated Cook’s net worth, based on his holdings of Apple stock, at about $120 million. He also holds restricted stock worth $665 million if it were to be fully vested.
The 54-year-old CEO’s revelation in Fortune’s lengthy profile of him is an example of the increasingly public philanthropy of the world’s richest people.
Billionaire financier Warren Buffett is encouraging the very wealthy to give away at least half their worth in their lifetimes through the “Giving Pledge,” whose website lists such luminaries as Microsoft Corp’s (MSFT.O) Bill Gates, Mark Zuckerberg of Facebook Inc (FB.O) and Oracle Corp’s (ORCL.N) Larry Ellison.
While Cook’s largesse could not begin to approach the scale of a Gates or Zuckerberg, both worth billions of dollars, the Apple CEO told Fortune he hopes to make a difference.
Cook, who is not listed on the website, is known as an intensely private person who shuns the spotlight on philanthropy.
In recent years, however, he has begun speaking out more openly about issues ranging from the environment to civil rights. Cook, who recently revealed he was gay, spoke out against discrimination of the lesbian, gay, bisexual and transsexual communities during his induction into the Alabama Academy of Honor last year.
He told Fortune he has started donating money to unspecified causes quietly and is trying to develop a more “systematic approach” to philanthropy that goes beyond writing checks
Posted by: Steven Maimes, The Trust Advisor
Forbes article by Siimon Reynolds
Here is my view of the key differences between the way Cook works versus the typical CEO or company owner.
1. He Puts Building A Great Company Ahead Of Building A Great Share Price.
Tim Cook has repeatedly stressed that he views endless speculation about the share price as an unwelcome distraction from the real task at hand – producing and selling world changing products. As he expressed it, “Companies that get confused, that think their goal is revenue or stock price or something. You have to focus on the things that lead to those things.”
And even more stridently,” If you want me to only do things for ROI reasons then you should get out of this stock.”
2. He Only Releases A Product When It Is Truly Outstanding.
A case in point is the Apple watch. Cook was under tremendous pressure early last year to announce a release date for the Apple timepieces. He resisted, even when he knew that competitors were working on similar products, because he knew that the product wasn’t yet good enough. Then when he finally announced the watch range, he still did not rush its release into the market.
3. He Is Obsessively Focused On Only A Few Products.
Compare Apple with Samsung. The shear breadth of Samsung’s product range is stunning, but Tim Cook takes an entirely different tact. He is ruthless at saying no to new products, unless Apple can not only produce the best in that category, but actually redefine what that category is.
As he puts it, “You can only do so many things great, and you should cast aside everything else.” And again: “But the DNA of the company, the thing that makes our heart beat, is a maniacal focus on making the best products in the world. Not good products, or a lot of products,but the absolute best products in the world.”
4. He Refuses To Lower Prices For Market Share.
Few industries are under more pressure to reduce prices than the computer sector. But again and again Tim Cook resists. He understands that price lowering is a game that is impossible to win and once begun is extremely difficult to stop. It also means reduced margins, which inevitably lead to lower product quality, which in turn lead to lower customer satisfaction.
Cook is adamant that moving away from premium pricing would greatly erode the Apple brand. “Price is rarely the most important thing. A cheap product might sell some units. Somebody gets it home and they feel great when they pay the money, but then they get it home and use it and the joy is gone.”
5. He Plays The Long Game, Keeping the Company’s Vision In Mind At All Times.
The defining characteristic of Tim Cook’s reign at Apple so far is surely his commitment to the Apple ethos. That philosophy is completely focused on product excellence, and Cook has been absolutely clear that he will stick with that vision for however long he runs the company. “Apple has a culture of excellence that is, I think, so unique and so special. I’m not going to witness or permit the change of it.”
Rather than just admire Tim Cook, why not take a moment now to examine each of the points above and compare them to how your company operates. How could you improve things thinking more like Tim? Which of these five areas should you focus on to take your company to the next level?
Tim Cook is indeed a masterful CEO, but he is following strategies that almost any company could also do.
Posted by: Steven Maimes, The Trust Advisor
Bloomberg News by Olga Kharif
Nasdaq OMX Group Inc. revealed Tuesday that New York-based Noble Markets, a platform for trading bitcoin, has agreed to license Nasdaq’s X-stream technology. Noble is adopting the same software used by securities exchanges around the world, and a related system runs the Nasdaq Stock Market, one of the biggest equity exchanges. The news follows the New York Stock Exchange’s January agreement to invest in Coinbase, another platform for trading the digital currency.
Markets for buying and selling bitcoin took a reputational hit when one of the biggest, Mt. Gox, failed in 2014. Mt. Gox filed for bankruptcy after discovering it had lost bitcoins belonging to customers and itself. Deploying Nasdaq’s software could give Noble greater legitimacy.
“It is a vote of confidence in bitcoin the technology,” Nicholas Colas, chief market strategist at Convergex Group, said in an interview. “Now that you are seeing big organizations providing technology, there’s a feeling that bitcoin is here to stay.”
While some bitcoin startups have recently built their own trading technology, Nasdaq’s system has been battle-tested for years. Nasdaq provides trading software to companies including Japan Exchange Group Inc. and Singapore Exchange Ltd., which are among the biggest market operators in the world.
“Nasdaq is open to providing its technology to other bitcoin exchanges,” Ryan Wells, a Nasdaq spokesman, said during an interview.
Noble was founded by John Betts, whose resume features stints at Goldman Sachs Group Inc., Morgan Stanley and UBS Group AG. Betts said his finance career included designing trading systems. His time working for the giants of finance may be a sign of maturation for bitcoin, and contrasts with Mt. Gox, which was originally envisioned as a place to buy and sell playing cards for the game Magic: The Gathering.
Nasdaq’s involvement is a good sign, according to Adam Draper, a venture capitalist at Boost VC who invests in bitcoin startups.
It “obviously shows that they think bitcoin is here to stay,” he wrote in an e-mail, referring to Nasdaq.
Posted by: Steven Maimes, The Trust Advisor
More than 3100 Schwab Advisor Services clients registered for a company webcast today to hear details on Institutional Intelligent Portfolios™ – the company’s automated investment management solution for independent registered investment advisors (RIAs). Among its robust feature set, Institutional Intelligent Portfolios will offer advisors the opportunity to create a diverse set of client portfolios utilizing more than 200 ETFs across all major fund families, a sophisticated advisor-branded digital experience for clients of advisors, integration with Schwab systems, and a two-tiered pricing structure based on total assets custodied with Schwab – all supported by the strength and expertise of the industry’s leading custodian. Institutional Intelligent Portfolios will be available in Q2 2015.
Advisor Services’ executive vice president, Bernie Clark, Schwab Intelligent Portfolios executive vice president, Naureen Hassan, and Advisor Services technology and strategy senior vice president, Neesha Hathi led today’s webcast, which addressed the changing investing landscape and details of Schwab’s advisor platform.
“Institutional Intelligent Portfolios provides RIA firms with access to a sophisticated, technology-based solution that can help RIAs capture and serve the transfer of wealth between generations, enable them to reach a broader market segment, and perhaps even serve some existing clients’ needs,” said Bernie Clark, executive vice president and head of Schwab Advisor Services. “With this in mind, Institutional Intelligent Portfolios can be deployed by RIAs in a way that suits their business and can play a valuable role in serving more clients in an efficient and profitable way, while complementing the invaluable wealth management services and client experience RIAs currently provide. More than just a new technology, this solution is an opportunity for RIAs to continue to transform the advisor office to better serve new and existing clients.”
With more than one-third (36%) of independent registered investment advisor (RIA) firms doubling their assets under management and revenues in the past five years1, RIA firms are actively seeking ways to institutionalize their business operations and processes to support firm growth and meet the evolving needs of existing and emerging clients. According to Schwab research, most advisors (56%) believe automated investment management solutions could supplement their current offerings and help drive growth2. Furthermore, 79 percent of firms are serving clients with assets below their firm’s stated minimum.3
“Automated investment management is a transformative topic in our industry today. Technology advancements, new market entrants and shifting consumer preferences for conducting more of their business online are driving this movement to investment automation,” said Naureen Hassan. “We designed Institutional Intelligent Portfolios to deliver scale and seamless integration to advisors in addition to what we believe is a hard-to-match feature set to help advisors maximize their investing and client expertise, while also expanding their reach as efficiently as possible.”
Robust ETF portfolios — portfolios designed by RIAs
With Institutional Intelligent Portfolios, advisors will make a number of decisions that reflect their investment philosophy and how they want to use the solution for their clients. Advisors can design portfolios for their clients selecting, at their discretion, from a broad set of more than 200 ETFs and 28 asset classes across all major fund families using four strategies; taxable and IRA-specific portfolios, municipal bond portfolios, or income portfolios. Advisors may choose to offer tax-loss harvesting. Portfolios must maintain a minimum of four percent in cash. Cash will be held in Schwab Bank, is FDIC-insured, and pays an indexed, market-based interest rate.
Sophisticated advisor-branded digital experience for advisor clients
Advisors will be able to add their own brand identity including their firm’s name, logo and contact information for use in an end-client web portal and mobile app. Advisors will have tools that help facilitate conversations with clients via co-browsing and the platform will be integrated with Schwab Alliance, the company’s website for advisor clients. Performance reporting will be available through the client web portal and mobile app. The platform also offers 24/7/365 customer service when advisors are unavailable.
Unmatched value, competitively priced to help firms grow and serve clients efficiently
The platform will have a two-tiered pricing structure based on total assets custodied with Schwab outside the Institutional Intelligent Portfolios program. For those with less than $100 million in assets under management (AUM) with Schwab, there will be a 10 basis point platform fee. For those firms who maintain more than $100 million in AUM at Schwab above and beyond Institutional Intelligent Portfolios AUM, there will be no fee. Advisors will determine their appropriate management fees, which will be billed through the standard Schwab custodial billing process. No account service fees, trading commissions or custody fees will be charged to advisors’ clients.
Streamlined, automated rebalancing, tax-loss harvesting and client onboarding
Institutional Intelligent Portfolios will provide a paperless account open and funding experience for advisors’ clients. Advisors will have robust client management tools, including automated rebalancing and the opportunity for tax-loss harvesting for accounts greater than $50,000. Institutional Intelligent Portfolios will work with advisors’ existing workflows and integrate with Schwab Advisor Center – a website that provides custody, trading, and support services for independent registered investment advisors who custody with Schwab. Account data will also be included in Schwab data downloads and can be imported into advisors’ portfolio management systems. Additionally, Schwab will provide advisors with a specialized service team to help with set up and ongoing support for their firm and their clients.
“Automated investment management is here to stay and our goal is to ensure that our advisors are prepared to participate in this potential growth opportunity on their terms in the most seamless way possible,” said Clark. “We have been working closely with advisor groups over the past year to shape our offer so that it meets RIA’s needs. Institutional Intelligent Portfolios is one of many innovations we’re investing in to support RIA firm growth. It is designed to help advisors continue to do what they do best – serve their clients.”
Advisors can go to institutionalintelligent.schwab.com/advisor to sign up for ongoing updates about the platform and its availability.
About Charles Schwab
At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity. More information is available at www.aboutschwab.com.
Posted by: Steven Maimes, The Trust Advisor
Presidential candidate hides spouse’s ties to Goldman.
This week, Ted Cruz was the first to throw his hat in the ring for the GOP presidential candidacy.
But during his speech, reference to his wife’s tenure at New York-based Goldman Sachs Group Inc. was suspiciously missing.
His wife, Heidi, has worked with the company since 2005 and served most recently as regional head of their Houston office.
Why the omission? Ever since the great recession, Wall Street has been a sensitive topic for the GOP, even as campaign funds continue to stream in.
During the 2012 presidential race, Democrats blasted Mitt Romney on his work in private equity.
Big names in the party are seeing the need to distance themselves, like when Rand Paul, the Kentucky senator, said that his party “cannot be the party of fat cats, rich people and Wall Street.”
During his speech on Monday, his wife and their two daughters joined Cruz.
In an attempt to connect with female voters, Mr. Cruz mentioned Mrs. Cruz’s childhood entrepreneurial venture, Heidi’s Bakery. “She goes on to a career in business, excelling and rising to the highest pinnacles, and then Heidi becomes my wife and my very best friend in the world,” said Mr. Cruz. Aides to the Cruz campaign say he is planning on stressing the effect strong women have played in molding his life during the campaign.
According to the New York Times, Mrs. Cruz is “a vegetarian with a Harvard M.B.A.” Mrs. Cruz told the Times in October of 2013 “I think it works really well for our family for us both to have careers, and I know what my commitments are to Goldman.”
However, Investment News reported that she would be taking unpaid leave to support her husband’s campaign, quoting a person briefed on the matter.
Posted by: Sarah Huebscher, The Trust Advisor
NYT article by Ann Carrns
If you turned 70½ in 2014 and have an individual retirement account, you have until April 1 to make your first withdrawal — known as a “required minimum distribution” or “minimum required distribution,” in tax lingo. The rule also generally applies to other tax-deferred retirement accounts, like 401(k)s.
If you don’t take out the money by the deadline, you may face a hefty penalty: You will owe an excise tax equal to half the amount that you failed to withdraw. So if you were required to withdraw $4,000, but you withdrew nothing, you would owe a $2,000 penalty.
The rule applies to traditional I.R.A.s, as well as the Simplified Employee Pension, Simple and rollover varieties.
The April 1 deadline applies only for the first required withdrawal; after that, the deadline for annual mandatory withdrawals is Dec. 31 of each year. (That means if you wait until April 1 for your first withdrawal, you will have to make two withdrawals in the same calendar year. That is something to keep in mind, since it may bump you into a higher tax bracket.)
Despite the size of the potential penalty, many people are slow to take out the cash. Fidelity Investments reports that as of Dec. 26, 2014, more than half (59 percent) of the company’s investors who were eligible to take their first required withdrawal from an I.R.A. in 2014 had not yet taken the full amount required. And, of those, 43 percent had not yet taken any withdrawal at all. (Taking a partial withdrawal reduces, but doesn’t eliminate, the penalty).
It may be that people just like pushing deadlines. But it’s also difficult for many to make the psychological shift from putting money into their retirement accounts to taking it out.
“You’ve been saying, ‘This is my nest egg,’ and you didn’t want to touch it,” said Maura Cassidy, director of retirement products at Fidelity. “Now, you have to tap into it.”
Some people may not recognize that the federal government, after encouraging them to squirrel money away, now wants them to make withdrawals.
“You cannot keep retirement funds in your account indefinitely,” the I.R.S. says in a discussion of retirement topics on its website.
“Basically, the I.R.S. wants to start collecting the taxes,” said Kevin O’Reilly, a financial planner in Phoenix.
Since the required amount doesn’t have to be taken in a lump sum, Mr. O’Reilly suggests that to avoid bumping up against a deadline, you may want to set up partial automatic withdrawals when you become eligible, so you receive smaller amounts periodically throughout the year.
Here are some questions about required retirement account withdrawals:
How do I know how much to withdraw?
The minimum distribution is based on your account value and your life expectancy. Each year, the IRS publishes life expectancy tables at the end of I.R.S. Publication 590. Investment companies also have calculators on their websites. Merrill Edge’s site has this example: If a traditional I.R.A. is valued at $87,000 and life expectancy is 22.5 years, you would divide $87,000 by 22.5 to get $3,866.67 as your mandatory withdrawal amount.
Can I withdraw more than the minimum amount required?
Yes; you just can’t withdraw less.
Does the minimum withdrawal rule apply to Roth I.R.A.s?
No. Roths are an exception; there is no withdrawal required during the life of the account holder. Also, you generally don’t need to take minimum withdrawals from a workplace 401(k) plan if you are still working.
If I failed to make a required minimum withdrawal, can I seek a waiver?
Yes. You can ask the I.R.S. to waive the penalty by submitting an explanatory letter along with Form 5329. You generally should have some sort of reasonable explanation — for example, you or your spouse fell ill, and you were distracted. You should also explain what action you are taking to remedy the problem.
Posted by: Steven Maimes, The Trust Advisor
Courthouse New Service article by Laney Olson
State Senator David Parks, D-Las Vegas, and seven cosigners introduced Senate Bill 336 on March 16. It would authorize “a physician to prescribe a controlled substance that is designed to end the life of a patient under certain circumstances.”
Nevada law gives terminally ill patients the right to refuse life-sustaining treatment. SB336 extends those rights by giving patients the right to “self-determination concerning medically assisted, informed, voluntary decisions about dying with dignity and avoiding unnecessary suffering.”
State Senator Tick Segerblom, D-Las Vegas, said he co-sponsored the bill because he’s seen quality of life deteriorate in terminally ill patients.
“We should all have the right to control our own destiny,” Segerblom said in a statement. “As long as that decision is educated and voluntary, I support it.”
An Oregon based organization, Death with Dignity, is working with legislators nationwide to help write end-of-life bills. Oregon enacted its Death with Dignity Act in 1994.
Death with Dignity said it is working with Parks and co-sponsor state Sen. Ben Kieckhefer, R-Washoe, “to provide a peaceful and dignified death for those suffering from terminal illnesses.”
SB336 will require patients to be diagnosed by two physicians, make two verbal requests at least 15 days apart, make a written statement and be mentally competent. The suicide drug or drugs can be administered only by the patients themselves.
Segerblom expects that religious organizations will be the bill’s largest opponents but argues, “It should be a personal decision, not a government-imposed decision.”
Give states have legalized assisted suicide: Oregon, Montana, Washington, Vermont and most recently, New Mexico. Similar bills have been introduced in 21 other states.
Posted by: Steven Maimes, The Trust Advisor
Bloomberg News article by Suzanne Woolley
After you’ve itemized deductions on your income tax for a few years, you get to know the drill. You track charitable contributions—even the little ones—and know what unreimbursed work-related expenses are legit. But even experienced itemizers miss things. We called leading tax preparers to find out what people tend to miss most. Here are their contenders for most-overlooked deduction or tax credit.
Relocation expenses—even if your company pays
No, you can’t double-dip, but if you get a new job that entails relocation at least 50 miles from your last job, you have deduction options. Say your employer covers $5,000, and it costs you $10,000 to move: You can deduct the $5,000 that came out of your pocket for the movers, storage units, mileage on your car and so on, says Jackie Perlman, principal tax research analyst at H&R Block’s Tax Institute.
You take the deduction the year you start your new job, though you have to work full-time for at least 39 weeks to claim the deduction. But if you start in, say, December, 2014, you still claim the exemption for 2014. You just have to expect to stay for 39 weeks into the following year. If you don’t make it that long, you can amend your return to remove the deduction—or include the amount you deducted in the next tax year’s income.
Personal loans gone bad
You’re a good friend. So when your friend needed money a few years ago to pay the rent, you helped. Hopefully you scribbled out a note saying that the loan was for, say, a total of $6,500, and whether you charged interest. Now your friend can’t pay you back. You’ve done everything possible to try and collect, to no avail. You can deduct up to $3,000 of the loan, and the remainder can be deducted in future tax years, says Lisa Greene-Lewis, a CPA and TurboTax blog editor. If you do this year after year, however, the IRS might question your unflinching generosity and wonder if you’re simply making gifts.
Going back to school
This one’s actually a tax credit, which is better than a deduction because it lowers your taxes dollar for dollar. The Lifetime Learning Credit allows someone who decides to go to graduate school—or just take a few courses—to claim 20 percent of the first $10,000 of tuition, fees, books and supplies. The cap is $2,000. There are income limits, though. For single and head of household filers, the credit gets phased out over an income range stretching from $54,000 to $64,000 (and from $108,000 to $128,000 for joint filers). There’s no limit on how many years the credit can be taken, says David Prokupek, chief executive officer of Jackson Hewitt Tax Service.
If you needed to put a child in day camp so you can work or look for work, you can take a maximum credit of $1,050 for one child and up to a maximum $2,100 for two or more. Depending on your income, the percentage of the expense you can take ranges from 20 percent to 35 percent. The $2,100 figure, for example, is 35 percent of the $6,000 maximum allowed for child-care expenses, says Greene-Lewis. Even sports camps are covered. For a married couple, both spouses have to be working, or one working and one looking for work.
Traveling for medical treatment
Say you live in Manhattan, and your doctor says you need to get a particular medical treatment at the Mayo Clinic in Minnesota. Your airfare may be deductible, says Mark Jaeger, Individual Tax Team Lead at TaxACT. The treatment has to be prescribed by a doctor and be essential, such as a cancer treatment. The IRS also allows you to deduct up to $50 per night for lodging per person, which makes it $100 when, say, a parent accompanies a child. If you drive, you can deduct either the actual expenses for gas and the like or you can use the standard mileage rate of 23.5¢ a mile.
The residential energy property credit
If you’ve already done a big energy project at home, such as adding solar panels or geothermal heating, you probably know you can deduct 30 percent of the cost of the improvement, with no limit. But if you’ve been thinking about doing a big project along these lines and have been putting it off, you may not realize that 2016 will be the last year this credit is available. You can get details on the government’s Energy Star website.
Posted by: Steven Maimes, The Trust Advisor
Newsmax article by Dan Weil
So it’s no wonder that retirement expert Tom Sightings sees them as a helpful tool for retirement investing. “Investing is so complicated,” he notes in U.S. News & World Report.
“How do I make the time? No time? No expertise? No problem. Invest in stock and bond index funds. They usually do better than managed funds. Many financial institutions offer both mutual funds and exchange-traded funds that index stocks and bonds.”
You might not get fabulously rich from these funds, but you will enjoy the same returns as the overall market, with less risk than if you buy individual stocks and bonds.
And there’s an added bonus. “If you own an index fund, chances are you are diversified,” Sightings explains.
To be sure, if you have a 401(k) plan, he warns against investing too heavily in your own company’s stock. That’s because you don’t want to be excessively dependent on your company.
Meanwhile, John Waggoner of USA Today explains that three crucial factors when you’re searching for retirement investments are safety, dividends and expenses. He lists several funds that shine in those areas.
Waggoner lists several funds that shine in those areas and should be included in a retirement portfolio.
The first is the Vanguard Target Retirement Income (VTINX). This is a fund of funds designed as an all-in-one solution for retirees who want to see both their principal and income increase, he writes. The fund allocates 65 percent of assets to bonds and 20 percent to U.S. stocks.
The fund has produced an average annual return of 5.6 percent in the past three years, sports a yield of 1.8 percent and has an expense ratio of 0.16 percent.
The second fund Waggoner likes is the Schwab U.S. Dividend Equity ETF (SCHD). “If you’re looking for a portfolio of large-company stocks with a long history of raising dividends, this is the fund for you,” Waggoner writes. “The fund’s criteria looks not only for high dividends, but high-quality earnings and balance sheets as well.” The fund has generated an average annual return of 16.5 percent over the past three years and has a yield of 2.6 percent.
Posted by: Steven Maimes, The Trust Advisor